 Hey everyone, this is Dan with another episode of my Tesla videos. In the last three months, Tesla stock dropped 14% when the NASDAQ ETF QQ has been flat. And SPY, the S&P 500 ETF went down by 2%. Tesla is apparently doing a lot worse than the broad market. Instead of selling my Tesla shares, I found that this might be a great opportunity to buy Tesla stock. It has to do with the new products that Tesla will be introducing in the next few months, including the Cybertruck and the licensing of FSD, the full self-driving system. Let's get into the interesting details. If you look back for a year, we can see that Tesla has been up 12%, which is about the same as SPY, but not doing as well as QQQ, which went up by 32%. We can see that Tesla went up shortly after the Q4 2022 and Q1 2023 earnings announcement. But it went down shortly after the Q2 and Q3 2023 announcements. When we look at their financial numbers in a few minutes, we will understand why. We saw a few minutes ago that Tesla has dropped almost 30% since its peak in September. My prediction is that instead of dropping a lot more, Tesla might be going up soon. But that will depend on whether Tesla can successfully launch a couple of new products. Stay tuned, we have a lot of interesting stuff to cover. The Q3 earnings announcement reported a drop in quarterly earnings and missed the revenue forecast mainly because they have been cutting prices of their vehicles to fight for market share. To make matters worse, Elon Musk downplayed the importance of Cybertruck for the immediate future. He also made pessimistic comments about the state of the global economy, particularly he complained about the high interest rates that prevent a lot of potential customers from taking out auto loans to buy new cars. No wonder that the stock price has been going down since late October. The Q2 earnings report was also disappointing. The Q2 and Q3 earnings explain why Tesla has been going down for the last six months. But wait up, Tesla is not fading into the sunset, definitely not. They have interesting products down the pipeline. We will talk more about that. To put things into perspective, let's look at Tesla's business. Tesla is primarily an automotive manufacturer. They are also considered to be a technology company. In fact, Tesla has been developing and applying advanced technologies on the cars and SUVs that they built so that they can gain a competitive edge. They currently build and sell five vehicles. The Tesla models S, X, 3 and Y, they also build the SemiTruck. Tesla only builds dozens of SemiTrucks so far. It is certainly not a determining factor for the company's profitability. The SemiTruck can become a major profit contributor for Tesla in the future, if and only if full autonomous driving becomes a reality so that Tesla can operate these trucks without drivers. That future scenario, however, might be years from now. We will talk more about autonomous driving in the next few minutes. The SemiTruck will be the product that will definitely boost Tesla's stock price in the next few months. The first few SemiTrucks will be delivered to customers starting on November 30, 2023. Once Tesla is able to build hundreds of SemiTrucks a day, their profit margin is expected to improve significantly. There are reported to be 1.9 million SemiTrucks pre-ordered by customers. It will take Tesla about five years to build so many orders. If you like what you've seen so far, please click the like, subscribe and notification button so that you will be notified when I post my next video. Thank you very much. Let's continue. We have a lot of interesting stuff to cover. Before we get too excited about the SemiTruck launch, we need to know that as recently as October 19, Elon Musk said SemiTruck production would not reach full capacity in 2023 and that the robot taxi's production date is not known to Elon Musk himself. Elon's comments caused the Tesla stock price to drop even more. Tesla will also introduce a roaster, which will probably be launched in 2024. The roaster is a very expensive, high-performance vehicle. Tesla will be able to sell at most a few thousand roasters a year. The roaster will be what they call a halo vehicle, which will enhance the image of Tesla in the automotive world as a technology leader. Unlike the SemiTruck, the roaster will not help Tesla's net income much in the next few months. Tesla also markets products to convert and store energy. They install solar panels and make batteries for energy storage. Tesla's energy business is growing quickly, but it is only a small portion of their total revenues for now. Recently, Tesla started to provide auto insurance for Tesla car owners. As of today, Tesla auto insurance is offered in only about a dozen states out of the 50 states in the US. Insurance generates only a very small percentage of total revenues for Tesla for now. Another strategic initiative that will improve Tesla's profitability in the near future is the licensing of Tesla's full self-driving system, or FSD, to other automotive manufacturers. When we hear about self-driving or autonomous driving, we need to understand what people mean. According to SAE, the Society of Automotive Engineers, there are six levels of autonomous driving. They are level 0 to level 5. Level 0 is completely controlled by the human driver, just like the way people drive cars 20 years ago. Level 5 is when a vehicle can drive itself without human intervention under any conditions. As of today, Tesla has only achieved SAE level 2 autonomous driving. At level 2, the car can act autonomously under some conditions, but requires the driver to monitor the driving at all times and to be prepared to take control at a moment's notice. Even Tesla admitted that the full self-driving system, or FSD, sold by Tesla, is only a level 2 system. Tesla has been investing a lot of money in building the Dojo supercomputer, which will enhance their full self-driving system. In my opinion, for Tesla to achieve true level 5 autonomous driving, it'll take at least a few more years. In the next couple years, however, Tesla might be able to license its level 2 FSD system to other automotive manufacturers, which will improve Tesla's earning per share by a few percentage points. We will talk more about that in a few minutes. Tesla started a limited RoboTaxi service in Las Vegas in 2022. It'll be at least a few years before RoboTaxi can generate substantial impact to the company's bottom line. That's because RoboTaxi will need level 5 autonomous driving. The Dojo supercomputer built by Tesla is one of the most powerful supercomputers in the world. It is dedicated to artificial intelligence training for autonomous driving. This is certainly a very important project for Tesla, because the Dojo supercomputer will widen the technological lead between Tesla and its competitors, which will effectively build a protective mold around Tesla in the long term. Even though it might take a few more years for the Tesla FSD system to reach level 5, the Dojo supercomputer can help Tesla build the best level 2 self-driving system in the market, which will still be a formidable competitive edge. Tesla has been publishing very encouraging data about their full self-driving system. According to this chart published by Tesla and reported by Inside EV, the frequency of accidents with cars with the Tesla self-driving system is 4.85 million miles per accident as of Q4 of 2022. The U.S. national average is 0.652 million miles per accident. That means the Tesla full self-driving system is almost 8 times safer than the national average. Now you might think that I'm just aggressively pumping Tesla stock because I own the stock. Yes, I do own Tesla stock, but I have sold quite a lot of shares recently when the price hit the peak and started to drop. I have informed my readers when I found the stock to have lost its glamour, and that I believe it's a good time to sell my shares. When that happens to Tesla, I will tell you so. In an April 26 article, the Fortune magazine said that the Tesla FSD system is not as safe as Tesla claimed. The article says Tesla counts the crash as an airbag deployment. The rest of the world, including National Highway and Traffic Safety Agency, tend to consider a crash as one that is reported. Basically, Fortune magazine was saying that Tesla was comparing apples to oranges in their safety data. The magazine also said that the Tesla safety data were mostly collected during highway driving, but highway driving by any car inherently has fewer accidents per mile compared to general driving. Therefore, Fortune magazine said that Tesla data really did not prove the Tesla self-driving system is safer than regular manual driving. The article also said that middle-aged and wealthy people who are the typical Tesla buyers are in fact the safest types of drivers. Therefore, we cannot compare the safety driving records to those of the general public. The magazine tried to reach out to Tesla for comments over the years since these numbers first started coming out. However, Tesla closed its press relations office and no longer responds to press inquiries. So maybe Tesla has published data on self-driving a roadsier than reality, but I have not seen any concrete evidence saying that Tesla's self-driving system is more dangerous than manual driving. If you look at YouTube, you can find many videos comparing the Tesla self-driving system with the self-driving systems offered by other OMEs. For example, this video compares Tesla with Mercedes Benz and this video published by Edmunds Cars compared Tesla with GM Ford and BMW. Both videos concluded that, number one, on highways, Tesla's self-driving system is more capable than those of other OEM systems. The other OEMs do not offer self-driving at all for non-highway driving, but Tesla does. The Tesla self-driving system is certainly not fully autonomous yet, but it's certainly more capable than the competitors. I believe in the current state, the Tesla self-driving system does offer Tesla a very important competitive advantage. More importantly, I believe Tesla has enough lead in this area to be able to license the self-driving system to other OEMs. And indeed, Elon Musk has confirmed that they are in active negotiations with other OEMs to license the self-driving system. In a few minutes, we will talk about what that means to the profitability and stop price of Tesla. Stay tuned. There is a much longer-range project being worked on at Tesla, which is the humanoid robot. Based on Tesla's plan, these robots will be used at manufacturing environments. Each household can also use one or more of these robots for tasks such as making coffee or doing house cleaning. In my opinion, the robot might not generate substantial revenues to Tesla until five to six years from now. However, once it is successfully produced, the potential revenues can be as high or higher than the revenues for cars. Aside from Tesla, Elon Musk also has controlling interest in SpaceX, Boeing Company, Neuralink, Starlink, and Twitter. In the long term, there will be synergy among these companies, which can possibly evolve into a powerful conglomerate that will dominate several industry areas. After saying all those good things about Tesla, I have to be cautious and mention some of the potential dangers related to Tesla. Because Tesla has opened new factories and ramped up their production in the last couple years, the order backlog has decreased. According to this chart, Tesla's global EV market share started with 20% in Q3 of 2021, dropped to 16% in Q2 of 2022, and went back up to 20% in Q2 of 2023. Volkswagen and the other EV makers are seeing shrinking market shares. The Chinese carmaker BYD, however, has been growing its market share faster than Tesla. Fortunately, BYD's market is primarily in China, which is not as profitable as the markets in the US or in Europe. Let's figure out how much the Tesla stock is worth. These are a few financial charts from the BetterInvesting.com stock selection guide database. As you can see, Tesla sales, the black line, has been growing very impressively in the last few years at approximately 50% annual rate. The EPS emerged into positive territory in 2020 and has been growing quickly, although Tesla's EPS has been flattening in the last few quarters. That's mainly due to price cutting in the recent difficult economic environment. Tesla's EPS will not be growing as fast as before unless they can successfully launch the cyber trucks and license the self-driving system. We will talk more about that soon. You might notice that BYD represented by the purple line has been expanding their sales and growing the EPS impressively. As a Tesla stock holder, I would definitely be monitoring BYD going forward. Tesla's debt to capital ratio is much better than the industry average. The BYD is not too far behind. Their return on equity has also been improving and is better than the industry average. From Tesla's Q3 financial statements, we can see that the automotive segment is by far their main revenue generator in 2022 and 2023 and make up 84% of Tesla's total revenues in 2023. The energy segment grew from 5% of total revenues in 2022 to 7% in 2023, which is very impressive. The US is Tesla's largest market and contributes to 47% of their total revenues. China contributes to 21% of Tesla's total revenues. In this table, I listed the revenues and net income numbers on Tesla's from Tesla's income statements By subtracting the net income from the revenue for each quarter, I calculate the total cost for each quarter. The chart shows the revenue versus cost for the most recent quarters for Tesla. The green line is the revenue, the red line is the cost. The space between the revenue line and the cost line is the net income. We can see that the net income is getting squeezed for the last couple of quarters. Since the automotive business makes up 84% of Tesla's total revenues, I use an approximation method by dividing the total net income for each quarter with the number of vehicles delivered and arrive at the average net income per vehicle delivered. As you can see, the net income went from $7,846 per vehicle for Q3 2022 to the maximum of $9,598 for Q3 2022 then dropped to $4,260 for the most recent quarter reflecting the more adverse economic conditions recently. Starting with the most recent results for Q3 2023, we have 435,000 vehicles delivered with each vehicle contributing to $4,260 of net income. We can build this table to extrapolate into 2024 and 2025. Let's assume Tesla would deliver 440,000 vehicles for Q4 2023 and each vehicle's net margin is $4,300 which is a slight improvement from today. To come up with the best case scenario for Tesla, I assume that their car and SUV delivery will increase from 440,000 a quarter to 480,000 a quarter. The net margin for their car and SUV I assume to increase from 4,300 to 6,000 per vehicle. From these assumptions, I can calculate the net income for each quarter for 2024 and 2025 due to car and SUV. Since the Cybertruck will be delivered to the customer on November 30, 2023, I assume they will deliver 10,000 Cybertrucks in Q4 2023 and will ramp up the delivery of Cybertrucks to 62,500 units in Q4 2025, which is the equivalent of 250,000 Cybertrucks per year at full production capacity. I assume the net margin for Cybertruck will improve from $4,000 per vehicle to $10,000 per vehicle. I then calculate the net income contribution from the Cybertruck for each quarter. For FSD full self-driving licenses, I assume it will increase from 0 units to 250,000 units per quarter during the two years. I assume the net margin for FSD to be $8,000 per vehicle and calculate the FSD contribution to net income for each quarter. Adding the net incomes from cars and SUVs, the Cybertrucks and FSD, I now have a total net income for each quarter from 2024 to 2025. Based on today's PE ratio of 69.47, I assume Tesla will maintain a PE ratio of 67. From these numbers, I can calculate the stock price to be at $241 at the end of 2024 and $376 at the end of 2025. We can also see the stock price contributions from the three segments, cars and SUV, which is the largest segment, Cybertrucks and FSD. I therefore predict the stock price of $240 by the end of 2024 and $370 by the end of 2025. Of course, I arrived at these predictions based on the volume assumptions and net margin assumptions of Tesla's future products. How many units of Cybertrucks and FSD Tesla will be selling in the next few months will tell us how closely the stock price will track towards my prediction. I will update my forecast every two to three months or so. Stay tuned. Let's see what the professional analysts have been saying about Tesla. Compared to the last time I looked at this table, which was July 23, 2023, the stock price dropped from $260 a share to $209 a share. My target was $280 a share by the end of 2024. I've revised it downwards to $240 a share by the end of 2024 and $370 a share by the end of 2025. Yahoo Business maintained their whole rating. Their high price target went up a little bit from $350 to $358. Their average price target went from $230 down to $215. In 2015, the low price target went from $71 to $22. TipRanks.com lowered their moderate buy rating to hold rating. The high target went from $350 to $380. Their average target went down a little bit from $258 to $248 and the low target went from $120 to $85. The Street.com maintained their C plus hold rating and they did not give a target price. Lewis Nevillear maintained his C hold rating and also maintained the C quantitative rating as well as the C fundamental rating. These are the upgrades and downgrades since late April. We can see that there were a bunch of downgrades in June, which was shortly before the Q2 earnings announcement. Fortunately, we only see one downgrade since July 2023. Morgan Stanley actually upgraded Tesla on September 11 from equivalent way to overweight and increased the price target from $250 to $400. That's certainly a very bullish sign for Tesla. Let's look at insider trading activities. Not surprisingly, in October and November of 2021, when Tesla peaked at $414 a share, insiders sold a lot of shares. And after that, the stock price dropped. Recently, insider selling has slowed down a lot. That means the insiders don't think the stock is overpriced and that they have confidence in the company, which is a positive sign. Again, my price target for Tesla is $240 a share to be reached by the end of 2024 and $370 a share to be reached by the end of 2025. Remember that I reached these predictions based on the best-case scenarios. If Tesla is not able to deliver the volume for the Cybertruck and the volume for the full self-driving system as I predicted, it will not reach these stock prices. Also, my assume P ratio of 67 will most likely go down as well. If things start to deteriorate in the next few weeks, I will inform you by way of my Twitter messages and by maybe a new YouTube video. From the technical analysis perspective, we can see that on the daily chart, Tesla has been making lower lows since September, which is a bearish sign. RSI is certainly not too high. That means the stock is not overboard. The daily DMI is bearish. The daily MACD is so very slightly bullish. Overall, it's still a very bearish chart. In the previous trading day, which was November 11th, we saw an uptake, but the entire stock market was going up on that day. It will be critical to see whether Tesla can stay above the 194 level, which is a very important support level. If the Cybertruck launch in about three weeks is successful, I'm sure the stock will be making higher lows and higher highs. That's most likely when I will be buying more shares. So what are my strategies? I still hold some Tesla shares bought earlier, and actually today, because of news about India, I bought more Tesla shares. I will buy more shares if stock price starts making higher lows and if the Cybertruck launch is successful in December of 2023. I will sell shares if Tesla falls below 194, which is a very critical support level, just so that I can buy again later at a lower price. Overall, I'm still bullish about Tesla for the long term. I will monitor Cybertruck production and FSD sales and will adjust my price targets accordingly. I will shrink trade some of the shares based on technical indicators to maximize my profit, and I will notify my Twitter or ex-subscribers almost daily on my stock market analysis and my trades. At this point, I'd like to encourage you to subscribe to my Twitter account in addition to subscribing to my YouTube channel. My Twitter account is DanMarketL with a subtitle investor channel. I will be notifying my Twitter subscribers if I buy or sell Tesla shares in the near future. These are a few examples of my recent Twitter messages. On December 29, 2022, I tweeted that I bought Tesla shares and looked like December 27 was capitulation day based on the volume. Paid ratio of 0.87 makes it a good bargain. That's why I bought the Tesla shares and also I refer to the Cybertruck launch in late 2023, which is happening soon. And then on October 12, I tweeted that QQQ dropped at 373 resistance and because I saw the market might be dropping, so I sold Tesla shares bought on September 5 at 3.9% gain. I also sold QQQQ shares to take profit. And at 11 am today, I tweeted that I bought Tesla shares at 19% below my sale price on October 12, 2023. And that's because according to a Bloomberg report, India is considering implementing tax cuts on imports of EV units in an effort to entice Tesla to sell cars in India and ultimately to build a manufacturing facility there. The stock price has also been going up today. I saw a higher low forming and therefore I bought more shares. Thank you for watching All The Way To Here. I'd like to remind you again to click the like, subscribe and notification buttons. As usual, I would very much appreciate your questions, comments and suggestions. Also, if you have a favorite stock that you want me to analyze, please make a request in the comment section below this YouTube video. I'd like to remind you that I'm not a financial advisor. I share my stock trading strategies and analyses for educational and entertainment purposes only. If you want to buy or sell stocks, you should make your own decisions and you should definitely consult your financial advisors before you do so. This wraps up my video for now. I will chat with you again in the next few days. In the meanwhile, I'd like to wish you the very best of luck with your financial investments.